Money Watch Q & A: Short Sale to Yourself?

If you have considered a short sale, you know there are stipulations about who can purchase your home. Banks require sellers to sign what's called an arm's length agreement, which basically means you cannot sell your home to a family member or friend, who will then transfer the title back into your name. It is an effort to deter mortgage fraud and prevent sellers from profiting off a short sale.

However, Governor Brian Sandoval signed into law this month SB 321, which is known as the Homeowner's Bill of Rights. It takes effect October 1, 2013 and as part of the law, banks cannot force sellers in a short-sale transaction to sign an arm's length agreement.

Previously sellers had to sign an affidavit that they had no relation, or affiliation with the purchaser of their short sale and they agreed they would not live in the home after the short sale. They also could not have a family member step in and help out by buying the home for them.

As a result of this new law, Nevadans have the ability to get help from family and/or investors who will allow them to make arrangements to keep their homes. However, the banks will still need to approve the sale.

Tonight's Money Watch Q & A short sale expert, Shirley Larkins says if people are in a position where they need to short sell now - they should not wait until October. The Chase International Realtor says the Mortgage Debt Relief Act was only extended through December 31, 2013 and it offers tax forgiveness for owner occupied sellers. Once this expires, people will have to pay the taxes for their short sale.

To learn more, call our Money Watch Q & A lines at (775) 858-2222 between 5-6 p.m. You can also reach Shirley during regular business hours at the contact information listed below: